Netflix still sucks on AT&T, and now AT&T plans to offer Netflix clone

AT&T partners with an investment firm to buy and launch streaming services.

AT&T and an investment group run by former Fox President Peter Chernin announced today that they have created a $500 million venture "to acquire, invest in and launch over-the-top (OTT) video services."

Further Reading

Customers are the victim of stalled negotiations between ISPs and Netflix.

This venture "creates the opportunity for us to develop a compelling offering in the OTT space," AT&T Chief Strategy Officer John Stankey said in the announcement.

OTT services provide video programming over an Internet connection, one that may come across the same wires as a separate cable TV service. AT&T hasn't been a fan of OTT provider Netflix. It's still haggling with the company over how much money the video service should pay for a direct connection to the TV and Internet provider's network. Netflix was able to strike a deal with Comcast, improving video quality for Comcast subscribers; Netflix quality on AT&T has remained substandard.

AT&T's new venture is with the Chernin Group, which Peter Chernin founded in 2009. "This alliance positions AT&T and The Chernin Group to take advantage of the rapid growth of online video and OTT video services, with each party bringing significant and complementary strengths. The strategic goal of this initiative will be to invest in advertising and subscription VOD channels as well as streaming services," the companies said.

Chernin noted that "Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles, and connected TVs on mobile and broadband networks. AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”

Verizon wants in on this action as well. It also created a video streaming service by partnering with Redbox and is also asking Netflix to pay for a direct connection to its network, even as Verizon users complain of poor Netflix performance. Netflix has tried to avoid making payments, despite giving in to Comcast, and has asked the FCC to issue net neutrality rules that "prevent ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype."

Listen! Out in the air! What's that sound? Is it an ice shelf cracking from climate change? Is it the Ukraine breaking up under Russian advances? No, it's the streaming market fracturing even more, benefiting no one! Yay!

Ironically, I just switched from AT&T U-verse to Comcast and jumped from AT&T's 18 Mbps down 1.5 Mbps up plan to Comcast's 50 Mbps down and 10 Mbps up plan. Ever since the switch, I'm having buffering issues on Netflix like crazy during peak hours. I never had any buffering issues whatsoever on AT&T.

Oh sure because cash from an investment firm plus a lame buzzword such as OTT will make for a great streaming service. Content won't suck or be limited, ads won't crash the player or cause the content to restart from the top, and it won't require browser plugins, or not work in some browsers. The investment firm has it all figured out! Right?

Who's going to actually be building this, and what content can we expect to see? Everything else is bookkeeping.

Edit: so why is it that when I edit a whole sentence 5 minutes after posting I don't get the EDITED tag, but when I edited a single letter in this post 30 seconds after posting, I got the EDITED tag?

a) squeeze Netflix out of business?b) cause a backlash against ISP's leading to increased regulation of ISP's?c) force ISP's to settle with having a regulated "internet" pipeline, which they will not interfere with, but will also not invest heavily in (and it will languish), while they simultaneously invest in a separate set of pipes that aren't used for internet traffic, but which instead host "paid" services -- basically cable over IP

I hope this fails miserably, not only pissing off AT&T customers using Netflix, but also wasting $500 million and pissing off AT&T investors. Not like the web needs more on demand video services, but competition doesn't hurt... except when it is your ISP trying to be that competition.

This is great because when I woke up this morning I found myself thinking that the thing I want more than anything else is for some company to come in and further fragment the online video market with yet another exclusive service that takes away customer choice.

Listen! Out in the air! What's that sound? Is it an ice shelf cracking from climate change? Is it the Ukraine breaking up under Russian advances? No, it's the streaming market fracturing even more, benefiting no one! Yay!

Oh sure because cash from an investment firm plus a lame buzzword such as OTT will make for a great streaming service. Content won't suck or be limited, ads won't crash the player or cause the content to restart from the top, and it won't require browser plugins, or not work in some browsers. The investment firm has it all figured out! Right?

Who's going to actually be building this, and what content can we expect to see? Everything else is bookkeeping.

Edit: so why is it that when I edit a whole sentence 5 minutes after posting I don't get the EDITED tag, but when I edited a single letter in this post 30 seconds after posting, I got the EDITED tag?

I think if you perform an edit and at that time you still have the latest post, there's no tag. As soon as someone makes another reply and there is a post beneath yours, you will get the edit tag. To me yours says "12 minutes ago" and so does the one directly beneath you, so by the time you did your edit there was already a reply.

As I've said before, if every customer of ATT and Netflix called ATT tech support every time they had a bad streaming experience, things would change. And it wouldn't hurt if a few of them switched over to the competition, even if that's DSL, and another good large group stopped paying their ATT broadband bills.

What lets ATT keep abusing their customers this way is that the customers keep letting them. You're not powerless, so stop acting like it.

So will AT&T only offer their service to AT&T customers... or will they someday want to broadcast to Verizon customers too? And if so, will they be willing to pay the fees to compete with Verizon's offering?

The fracturing continues. Eventually, what you are able to access will depend on what company owns your connection.

I just don't understand the line of thinking here. Netflix quality sucks on AT&T DSL and U-Verse, but rather than make the necessary changes to deliver a quality connection for its customers, they are going to spend $500 million to create a new service that everyone knows will suck?

I think it would be fair for the FCC to apply different standards to ISPs who just provide connectivity vs ISPs who are also content providers. There are a very different set of anticompetitive issues in the latter case, sufficient in my opinion to justify mandating net neutrality on both ends (i.e. not just on the consumer side of things but also on the content side), even if they cannot bring themselves to mandate it to ISPs who are not content providers.

I just don't understand the line of thinking here. Netflix quality sucks on AT&T DSL and U-Verse, but rather than make the necessary changes to deliver a quality connection for its customers, they are going to spend $500 million to create a new service that everyone knows will suck?

Actually, I don't think it will suck. That's the point. It'll be marginally better than Netflix (at least line feed quality) so they can edge out Netflix and get the money that's currently going to Netflix.

PLUS, they control the bandwidth to Netflix, so they can make their feed (Netflix) worse and say "See? Our service is better).

Listen! Out in the air! What's that sound? Is it an ice shelf cracking from climate change? Is it the Ukraine breaking up under Russian advances? No, it's the streaming market fracturing even more, benefiting no one! Yay!

I think this comment is missing the point. Truth be told, the issue with a "fracturing" of the streaming market is that there are a multitude of content holders and in order for one OTT service to serve EVERYTHING, hundreds of contracts have to be worked out with the content owners.

Frankly, a "fracturing" of the streaming market is technically a good thing, more competition.

If Netflix could serve every TV show and movie ever created, but were the only company to do so, I think we can all agree that would be a bad thing.

The trouble with AT&T creating their own OTT service is not that it competes with Netflix, but rather that their service would be given preferential service, priority data, which is very non-net-neutral.